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3 HDFC Securities Stock Picks For Gains Up To 20% In The Short To Medium Term

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The holiday shortened week to September 9 for the Indian markets was rather muted and after a good run up in the preceding week, there are views that we could see sharper than expected correction in mid September starting next week. Nonetheless, leading brokerage HDFC Securities has come up with few stock recommendations for short to medium term for quick gains of up to 20%.

 

1. IIFL Wealth Management:

1. IIFL Wealth Management:

The brokerage firm is bullish on this financial services company IIFL Wealth for gains of over 8 percent. The last closing price of the stock is Rs. 1674.75, while the target price set out is Rs. 1815 per share. The stop loss recommended is Rs. 1505, while the time horizon is up to 3 months.

Here are the observations for the scrip by the brokerage firm:

As per the brokerage the recent downward correction in the scrip seems to have concluded and the stock is currently signaling a decisive upside breakout of the crucial overhead resistance at Rs 1665 levels.

"The positive chart pattern like higher tops and bottoms is intact and the stock price has bounced up recently after the formation of new higher bottom at Rs 1500 levels. Hence, one may expect upside bounce from here. Weekly 14 period RSI has turned up from 65 levels, which indicate a strength of an upside momentum in the stock price. The overall chart pattern of IIF Wealth indicate long trading opportunity", said the brokerage.

StockCurrent priceTarget pricePotential gains
IIFL Wealth Rs. 1674.75 Rs. 1815 >8%

2.	Sudarshan Chemical:
 

2. Sudarshan Chemical:

The brokerage firm HDFC Securities has recommended Sudarshan Chemical, a leading color and effect pigment manufacturer. The brokerage has recommended the scrip as its positional pick for a time horizon of 3 months and target price of Rs. 780. This implies gain of 15.60% from the last traded price of Rs. 674.75.

As per HDFC Securities, the chemical company has breached above downward sloping trend line. "The stock has taken a support on 50% of the bull candle. We observe a formation of bullish pattern on daily and weekly time frame. The stock is trading above 21 EMA. Momentum oscillators like RSI and MACD are giving bullish indication suggesting bullish movement for the stock for few more weeks. The overall chart pattern of Sudarshan chem indicates long trading opportunity", added the brokerage firm.

StockCurrent priceTarget pricePotential gains
Sudarshan Chemical Rs. 674.75 Rs. 780 15.6%

3. NRB Bearings:

3. NRB Bearings:

HDFC Securities is bullish on auto components company, NRB Bearings and sees it to gain up to 20% from the current market price of Rs. 140.45. The target price set out for the scrip is Rs. 168.

The company is an ISO 9001 certified best bearing manufacture company in India and today over 90% of vehicles on Indian roads run on NRB parts.

HDFC Securities take

The company has been the major beneficiary of the strong volume recovery in the auto segment. Further, going ahead there is seen revival in demand owing to recovery in OEM offtake. The company's customer base is across segments such as two-wheelers, commercial vehicles (CVs), passenger cars, utility vehicles (UVs), farm equipment & tractors, off-highway vehicles, railways and defence.

Other key points

- NRB produces all its output indigenously unlike its MNC peers

- The company is well positioned to capitalize given the high share of demand from OEMs

- Export has been a key driver registering a growth of 10% v/s 1.5% CAGR growth in domestic market over FY12-21.

- "Increasing R&D spend and foray into Defence,Aerospace and Railway segments coupled with fall in interest cost could aid in topline and margin expansion. Fears over impact on revenues due to the advent of electric vehicles are partly justified as ICE engines need more number of bearings than Electric engines. However, though the number of bearings required may come down, the complexity and value add of bearings in EVs may be higher", notes the brokerage company

Valuation & Recommendation: We expect NRB's revenue/EBITDA/PAT to grow at 17/21/29% CAGR over FY21-FY23, led by increased demand in the automobile industry, operating leverage and reduction in debt. We believe investors can buy the stock in the band of Rs 132-134 and add on dips to Rs 116-118 band (12.5x FY23E EPS) for a base case fair value of Rs 150 (16x FY23E EPS) and bull case fair value of Rs 168 (18x FY23E EPS) over the next 2 quarters.

StockCurrent priceTarget pricePotential gains
NRB Bearings Rs140.45 Rs. 168 19.62%
Disclaimer:

Disclaimer:

The stocks in the story are taken from the HDFC Securities brokerage report and is for informational use only and should not be construed for investment advice.

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